SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
LITIGATION RELEASE NO. 16001 / December 15, 1998
Securities and Exchange Commission v. Rex G. Ahlstrom, U.S.
District Court for the Eastern District of Virginia, Civil Action
No. 98-1775-A
The Securities and Exchange Commission today announced the
filing of a settled complaint for insider trading in the
securities of BDM International, Inc. against Rex G. Ahlstrom of
Reston, Virginia. BDM was a defense and information technology
company, headquartered in McLean, Virginia. The complaint, filed
with the U.S. District Court for the Eastern District of
Virginia, alleges that Ahlstrom purchased BDM stock after
learning indirectly of confidential information relating to a
tender offer for BDM from his neighbor, a senior executive at
BDM. Ahlstrom's trading resulted in illicit profits of $16,315
and violated Section 14(e) of the Securities Exchange Act of 1934
and Rule 14e-3 thereunder.
According to the complaint, in November 1997, the wife of
the senior BDM executive telephoned Ahlstrom's wife and requested
child care assistance because she was ill. In this conversation,
the senior BDM executive's wife disclosed to Ahlstrom's wife that
the senior BDM executive could not assist with child care because
BDM was being sold. Ahlstrom's wife relayed this information to
Ahlstrom and, after confirming on the Internet that the
information was not yet public, Ahlstrom purchased 2,000 shares
of BDM stock. At that time, Ahlstrom knew that his neighbor was
responsible for merger and acquisition activity at BDM. After
the November 21, 1997, announcement by BDM that it had agreed to
be acquired in a tender offer by TRW, Inc., Ahlstrom sold his BDM
shares for a profit of $16,315.
Prior to the filing of the action, Ahlstrom consented,
without admitting or denying the allegations of the complaint, to
entry of a final judgment permanently enjoining him from
violations of Section 14(e) of the Exchange Act and Rule 14e-3
thereunder, and ordering Ahlstrom to pay disgorgement of $16,315,
prejudgment interest of $1,171, and a penalty of $16,315 under
the Insider Trading and Securities Fraud Enforcement Act, for a
total payment of $33,801.
The Commission wishes to acknowledge the cooperation of
NASD Regulation, Inc. in this matter. The Commission's
investigation into trading of BDM securities is continuing.